Despite the challenges of inaccessibility of funding from China for the Ajaokuta-Kano-Kaduna (AKK) gas pipeline project, the Chairman and Group Chief Executive Officer of Oilserv Limited, Emeka Okwuosa, whose company is handling the project, says the project remains on track to be completed before the end of this year. Okwuosa, whose company has handled other multi-complex gas pipeline projects, also speaks on Nigeria’s energy transition, the benefits of Nigeria’s local content law to the service providers, among other issues.
The oil and gas sector has come a long way and what it means is that we have a more robust industry now and far more participation of Nigerians across board – across that industry, which includes exploration and production, service delivery, financial services, and so on.
We have a more robust industry today than what we had previously and it continues to grow since the enactment of the Nigeria Oil and Gas Industry Content Development (NOGICD) Act 2010 which drives the local content capacity building, Nigerian Content Development and Monitoring Board (NCDMB), which manages the local content activities.
I can say they have actually done a lot and are still doing more to build capacity; as you can see the capacities in the service industry have improved tremendously, because the service industry is the most important in the oil and gas industry.
Enhancing the service industry is how you trickle down values in the industry to the economy of a country. So, a robust service industry means that a lot of the value is in basically developing and operating oil and gas facilities, and gas assets are domiciled within the country. Remember, it’s not just about the ownership of these assets, it’s about the services rendered as you develop these assets and you keep running these assets.
So, we have come a long way. There is also a lot of participation of Nigerians in exploration and production which is the exploration and production (E & P) sector of the country’s economy and it continues to grow. Of course, there are still some gaps in efficiency, gaps in the ability to deliver and especially local participants but there are reasons for these and there are some of them which are not an issue.
What it means, in essence, is that Nigerians have grown a lot and with the coming up of PIA (Petroleum Industry Act), which has been effective and ignited into law, it is being operationalised; you can now see us with an NNPC as transformed into NNPC Limited. With all these implications, there are also much more implications in operation than we have in the E & P industry as well as the service industry. So, the bottomline is the industry is getting more robust as we are adapting to best practices and at the same time we are adapting to changes in the world and that’s the way it is.
Currently, your major commitment is the AKK project. What is the situation presently as there are insinuations in some quarters that the AAK project is facing some financial challenges. Specifically, China, the main sponsor is said to have pulled out; what is the situation and how are you sourcing for funds to complete the project and when is the job expected to be completed?
The AKK project is a very crucial project, very important; you may wish to know that the importance is underpinned by the fact that for us to develop as a country we need energy and the most abundant source of energy to Nigeria is gas and fortunately for us, we have a lot of gas reserves in the country.
For Nigeria, we have the energy but gas is meaningless if you cannot produce and transport it. Transportation is the most important because you cannot store gas very much; you need to move gas from the point of production to the point of utilisation and be able to match the availability of gas to utilisation of gas.
So, AKK is a major part of the Nigerian gas master plan, the backbone of the transmission system of gas. As we speak, we have gone pretty far as the execution of the project is concerned. The AKK will be finalised this year and delivered this year as work is fully ongoing and we are working closely with NNPCL as the client to have it delivered.
The project is based on a build and transfers modern. What it means is that the funding has to come from a partner. China was approached, negotiations were made, and NNPCL and the federal government met all the conditions to be able to secure the loan for the project.
Unfortunately, as we speak, nothing has come out of that, in terms of what China would bring. I am not in a position to state why, but all I can say is that all the requirements from us as a contractor from NNPCL as the owners of the project and from the federal government, including the sovereign guarantee, which the president signed and made available, everything needed by Nigeria was done.
But also I may wish to tell you that irrespective of that, NNPCL has moved in to make sure that funding does not create a problem for the project. NNPCL has been funding this project from inception to navigate the negative impact of the non-availability of funding from China.
As I said earlier, I am not in the position to say why the China funding has not materialised; it’s not because Nigeria failed to do what it ought to do in line with the requirements for the Chinese funding. We did all that should be done and the project is moving smoothly, as the project is not hampered much by the unavailability of financing from China and that is where we are currently and of course, in the future, we will see how it works.
Are there other challenges that may affect the completion target?
As stated earlier, the project is going to be completed before the end of 2023; the project is ongoing and of course, we have had our fair share of setbacks, the most difficult was the COVID-19 period, which impacted so much on the project.
If you recollect, there was a total lockdown from March to September of 2020 that impacted the project and thereafter the restriction of movements and travels also affected the project. But having said that, the other impact came from the huge flooding that happened in the last rainy season which cut off a lot of places where work was ongoing. It took about three months of flooding before we could resume work in some areas; we couldn’t have access until December last year because of the flood. That is it.
Also, we are not oblivious of the coming election and we know how it works in Nigeria, as we are doing everything possible so that there will be no impact of the election period on the successful project completion.
However, of course, we know few days before the election we will not be able to work because of the restriction of movement; so, we are doing everything to mitigate it. So, bearing all of these, the project will be delivered in 2023.
How can we utilise and maximise gas for our transition energy?
Well, it is said right that gas is what we call transition energy. Gas is in a position to enable us to meet some of the requirements of the framework of the environmental target. In sub-Saharan Africa and the developing world, you need gas to be able to develop because our needs are different from the developed world. With that, we have to adapt and that is why we are keeping in mind the requirements of the E.S.G targets. now,
Security remains key in the execution of pipeline infrastructure; how are you able to overcome this?
Well, security challenges like many other challenges are things we have to live with in our country. Every country and any country has got one challenge and Nigeria is no different.
We cannot wish away the security challenges, of course, I am aware that the federal government, business operators, and individuals are all doing a lot to find a way out of these security challenges and we are hopeful that as we keep developing our democratic system we will overtime reduce the occurrence and incidence of this security issues bedevilling the country.
But as of today, we live with it and we have to find ways to mitigate it as well as find ways of living our lives irrespective of what I can call the setbacks of this occurrence.
So, in the industry, we have methods and ways to mitigate the issues by working with security agencies and stakeholders of all manners to be able to continue executing and delivering our project even with these constraints.
For us, it’s a problem that is already existing, but what I can say is that it is not stopping us from being positive and looking forward to making sure that we work to develop capacity in the oil and gas industry in Nigeria.
Don’t forget that in pipeline construction you are exposed a lot to the environment because you go through every inch of the space by building the pipeline which means you are exposed to everything, not only security but to all manner of issues. But we will deal with this because we have a methodology to work with.
How did you receive the news of your nomination as Vanguard Business Man of the year? How would the award propel your to do more in your contribution to the economic growth of the country?
I am quite happy that Vanguard deemed me qualified for the nomination as Vanguard Energy Icon. I believe it is recognition of my contribution in the oil and gas industry, especially in building capacity across the board.
The system I have built has very strong management efficiency. We have an employee base of close to 2,000 people and we contribute a lot to the national economy in many ways. Of course, I am not talking about our vendors and community and many stakeholders. What is important is that all these sum up the means of developing our country Nigeria.
As such, I am happy about this and all I will say is that it gives me more impetus to continue to work hard in developing these capacities and building up our capacities in the oil and gas industry to make Nigeria better. I would say I am happy to receive the honour as I never expected it.
Credit: This Day